August 11, 2004

SMH JUST MAKING IT UP

The Sydney Morning Heraldís headline: "Don't tax the rich, says Bush". And the story, sourced from AFP and Reuters:

There is no point taxing the rich because they just dodge their tax bill anyway, President George Bush said.

"Real rich people figure out how to dodge taxes," Mr Bush said on Monday during a campaign stop in suburban Washington.

Consider the evolution of that headline. First, you have Bush speaking about comparative rates of taxation, and the effects of a "rich-only" tax on the relatively non-wealthy:

Just remember, when you're talking about, oh, we're just going to run up the taxes on a certain number of people -- first of all, real rich people figure out how to dodge taxes. (Laughter.) And the small business owners end up paying a lot of the burden of this taxation.

This gets reduced to the assumption apparent in the first paragraph; that thereís no point taxing the rich. Which Bush clearly didnít say. From there, itís a short stroll to a headline that paints Bush as advocating a taxless existence for his vile billionaire cronies. The Sydney Morning Herald is getting worse by the day.

Posted by Tim Blair at August 11, 2004 09:07 AM

Comments

Tim - I suspect Bush said this purposely, waiting with bated breath for an opponent to challenge him on it, so he can say something like this: 'Of course the rich don't pay taxes. Look at Teresa Heinz Kerry, for example.'

That headline was nothing to the SMH today (Wed Aug 11) "Butler Furious..." the headline and the accompanying story supported the line that goes "Since Butler is anti-Iraq-war (IAW) he is good and trendy. Clearly too good and trendy for Tasmania"

The SMH overlooks his outrageous and incompetent (in the context) performance as Governor. You can argue that the post should not exist but you shouldn't take the salary. Unless of course he wanted to reform from "inside the system"?

You always get that from pinkos. They complain that the rich don't pay tax and when a government cuts taxes they complain that the rich are getting a tax cut. You can't get a tax cut if you don't pay tax.

at the risk of preaching to the choir, what the hell is wrong with a flat rate tax, say 33%.

If I earn three or four times what Joe Average makes, I pay three or four times as much tax. For that, I don't get three or four times more government services.

At 33%, I keep $2 for every $1 the government takes.

Getting a bit more radical, why don't we move from a "one person one vote" system to one more like a shareholder democracy - the value of your vote is directly proportional to the average of your last three personal income tax bills.

Even better, why don't we get to nominate in our tax returns where our taxes get spent. Let the government of the day choose where to spend say half, but let us nominate the other half. Lefties can send their money to the unemployed, druggies, one-legged lesbians of colouyr and so on, and I'll send my money towards the two new aircraft carriers - ahem amphibious ships - for our navy.

at the risk of preaching to the choir, what the hell is wrong with a flat rate tax

Diminishing marginal utility. With rich people, the utility of a given amount taken away by tax is much diminished compared to the utility of an amount taken away by tax from a poor person. So to minimise utility loss, the proportion of tax paid by poor people should be minimised.

I think Bush should have been more clear on what he meant. Something like - "The richest people won't pay taxes, because they don't earn wages like you and me. Whatever the highest income tax bracket is set at, they will ensure that they make just under that amount. They live off trusts, foundations, investments, etc. for the bulk of their money." When called on to provide an example of that, then he could jump in with "You'll have to ask Teresa Heinz Kerry about that. I'm a regular wage earner now."

Why does diminishing marginal utility matter when you look at taxation? The argument you use is for the justification of a "progressive" tax rate structure. Remember taxes are coerced, it is not a free will transaction.

The SMH's idiocy is completely expected. Last time I was in Oz, I stopped getting the SMH and switched to the Australian because the SMH seemed to take its news straight from the Labo(u)r press releases and parroted the worst anti-American nonsense from the BBC.

As for diminishing marginal utility -- that argument merely justifies penalizing the rich for having more money. Merely a prelude to more socialism.

That is the basis of graduated income tax rate schedules. The flat tax would be much easier to file and less apt to allow breaks to get any particular taxpayer off the hook at the expense of someone else. And it still results in higher incomes paying more.

Andjam: All flat tax schemes I've ever heard of exempted the first N-thousand in income from tax entirely, thus greatly reducing impact on The Poor, and in effect making the tax graduated at the bottom end.

Mr. Dodge: True enough, but even the majority of blue-skinned freaks (libertarians, the set of which I don't quite count myself a member, but have deep sympathy for) admit that government has legitimate purposes that can't reasonably be paid for by any means but taxation. (National defense, maintenance of the legal system, etc. Protection from fraud and coercion really are public goods that need to be provided to all citizens, regardless of their ability to pay for them directly. Thus, taxation.)

Quentin, the problem with Bush "...merely refuting the idea that increasing the tax on higher income earners would solve deficit problems" is that it attacks a prime assumption of the left. That it is also a misconception is immaterial. Bush dared question Their Doctrine.